Last year, I missed an early surge of a meme coin due to a CEX withdrawal congestion. I didn't lose much money, but the feeling of 'opportunity right in front of me but unable to seize it' made me realize one thing: the current underlying architecture of CEX can no longer support the next wave of Web3.
Today, let's talk about why infrastructure projects like Kite will become a key piece for the survival of CEX in the future.
CEX's Achilles' heel
Current centralized exchanges may look glamorous on the surface, but they hide two major risks inside:
Highly dependent on public chain performance: Users' withdrawal speeds are entirely constrained by the underlying public chain. Once faced with on-chain congestion (such as during a bull market or a meme coin season), withdrawal delays of several hours are common.
Trust costs are rising: Users are always worried whether their assets are misappropriated and whether the data is real. Each explosion event consumes the trust capital of the entire industry.
CEX is essentially a 'Web2 shell containing Web3 assets'. When the volume and variety of assets grow exponentially, this shell is nearing its limits.
What changes can Kite bring?
1. Efficiency revolution: Say goodbye to on-chain congestion.
Kite's core is to provide CEX with a verifiable off-chain computing layer. In simple terms, CEX can batch process and verify a large number of user withdrawal requests off-chain, then package and confirm them on-chain at once.
This means:
Withdrawal speed has decreased from 'hour-level' to 'minute-level or even second-level'.
Significantly reduce on-chain gas costs of CEX.
Even in extreme market conditions, the deposit and withdrawal channels can remain smooth.
2. Trust upgrade: From 'You believe what I say' to 'Verifiable on-chain'.
Kite's data availability layer allows CEX to make key data (such as reserve proof, user asset snapshots) publicly available on-chain, and it cannot be tampered with.
Users no longer need to fully trust the 'integrity' of CEX; they can verify themselves through on-chain data. This is a qualitative leap for establishing long-term trust and responding to global regulation.
3. Functional breakthrough: Opening the door to Web3 services.
In the future, CEX cannot only engage in spot trading. More complex on-chain funds, staking derivatives, cross-chain asset management... all require secure and efficient underlying support.
Kite's fraud proof and state channel technology make it possible for CEX to securely integrate these advanced functions.
Why must CEX act immediately?
User experience has become a core competitive advantage: When one CEX's withdrawals are always blocked while another's arrive in seconds, users will vote with their feet.
Compliance pressure is increasing: Verifiable on-chain audit data will become a necessity for responding to regulation.
The next bull market will be an 'infrastructure bull market': Those who upgrade their underlying systems first will be able to accommodate larger capital volumes and more complex asset demands.
The launch of Kite is not just 'adding another token', but 'changing the engine'.
For CEX, launching Kite is not just a regular token listing, but a strategic upgrade of its core trading and settlement systems.
It's like replacing a giant ship's engine and navigation system with more advanced ones—not to carry more cargo, but to survive and lead in the upcoming storms and races.
Finally, a few words
The evolution speed of Web3 far exceeds expectations. If CEX continues to cling to old architectures and relies on marketing and rate wars, it is likely to be abandoned by both users and regulators in the next cycle.
Infrastructure like Kite may not directly lead to user growth, but it addresses the fundamental issues of efficiency, security, and trust within CEX.
Exchanges that understand this and layout in advance are likely to become the winners of the next cycle.
